Optimist
  • News
  • Sports
  • Opinion
    • Columns
    • Editorials
    • Letters to the Editor
  • Features
    • Book Review
  • Multimedia
    • Photo Galleries
    • Videos
  • Police Log
  • Print Edition
  • Projects
  • Classifieds
  • About
    • Advertise
    • Policies
    • Staff Contacts
    • Jobs
You are here: Home / Opinion / Columns / We need student loan reform

We need student loan reform

May 5, 2018 by Evan Rodriguez

First, let’s start off with some numbers so you can understand the absolutely miserable situation we are in.

  • $1.48 trillion in total U.S. student loan debt
  • 44.2 million Americans with student loan debt
  • Student loan delinquency rate of 11.2 percent (90+ days delinquent or in default)
  • Average monthly student loan payment (for borrower aged 20 to 30 years): $351
  • Median monthly student loan payment (for borrower aged 20 to 30 years): $203

That delinquency rate of 11.2 percent? During the peak of the housing crisis, the delinquency rate on home loans only reached 10.6 percent. The $1.48 trillion in student loan debt is $620 billion more than the total U.S. credit card debt.

Obviously, these numbers have been driven by the increasing cost of attending college.

According to Gordon Wadsworth, author of The College Trap, “…if the cost of college tuition was $10,000 in 1986, it would now cost the same student over $21,500 if education had increased as much as the average inflation rate but instead education is $59,800 or over 2 ½ times the inflation rate.”

The path we are on is not a viable option for us or for future generations. Stopping rising costs is a tough task which has been tried by both political parties to no avail.

What we need to do is rethink student loans.

A radical new idea has been proposed by some senators and a few private universities. The idea is known as Income-Sharing Agreements and were first proposed by Milton Friedman in 1955. Since then, the idea has evolved.

An Income-Sharing Agreement is fairly simple. A student would reach out to a private company which specialized in these agreements before their freshman year and submit their college of choice and degree they will be pursuing. For example, if after scholarships a student at ACU would still owe $20k per year, the company would loan them $10k each semester to cover the remainder of their balance. When the student graduated, they would owe that company a fixed percentage of their income based upon the job placement record of that university and the degree plan they had chosen. For example, someone with an accounting degree would owe 5 percent of their income over 10 years. Someone with an undergraduate degree that has lower chances for job placement compared to accounting, such as psychology or gender studies would owe a higher percentage of their income closer to 10 percent. It’s not that these degree paths are not important or that job placement is all that matters, it’s that these degrees generally require more education beyond an undergrad degree to be profitable.

If students reach or exceed their earnings potential after college, the company who had originally made the loan would come away with a profit which would offset those students who did not.

Whether you work as a waiter out of college or start with 6 figures, this percent wouldn’t change. It incentives colleges to produce degree programs with high job placement. It holds universities accountable and would also help with lowering costs as universities would cut programs which weren’t helping students find jobs.

Some universities have begun setting aside parts of their endowments for income sharing agreements. This benefits the endowment by potentially causing it to grow and by saving students from burdensome loans with high inflexible repayments.

The idea isn’t a perfect one, and I encourage you to look into it more, but I believe it is a better path forward than the current one we are on.

Filed Under: Columns

Other Opinion:

  • Skipping class is a drug

  • Athletics have a lack of traditions leading to low engagement from students

  • Directionless but encouraged: My experience on The College Tour’s film set

About Evan Rodriguez

You are here: Home / Opinion / Columns / We need student loan reform

Other Opinion:

  • Skipping class is a drug

  • Athletics have a lack of traditions leading to low engagement from students

  • Directionless but encouraged: My experience on The College Tour’s film set

Follow us online

  • Facebook
  • Instagram
  • Twitter
  • YouTube

Optimist on Twitter

acuoptimist The Optimist @acuoptimist ·
16 Feb

Black Student Union, the Office of Multicultural Affairs and the Office of Diversity, Equity and Inclusion have joined together to plan events that educate others and provide celebrations during Black History Month. Read more:
https://acuoptimist.com/2023/02/black-history-month-events-educate-celebrate-acu-community/

Reply on Twitter 1626340622872285184 Retweet on Twitter 1626340622872285184 Like on Twitter 1626340622872285184 2 Twitter 1626340622872285184
acuoptimist The Optimist @acuoptimist ·
11 Feb

BREAKING: Robert D. “Bob” Hunter, vice president emeritus, passed away Saturday. Hunter served as a representative of the 71st district of Texas and worked part time with ACU until 2013.

Reply on Twitter 1624540404690436097 Retweet on Twitter 1624540404690436097 4 Like on Twitter 1624540404690436097 23 Twitter 1624540404690436097

Optimist on Facebook

The Optimist

3 weeks ago

The Optimist
Scott Erickson, artist, author and performance speaker, visited campus and spoke at Chapel during the Black History Month speaker series last week. His presentation was entitled, "Say Yes: A Liturgy of Not Giving Up On Yourself." Read more: ... See MoreSee Less

Author, performance speaker visits campus bringing a message on mental health - Optimist

acuoptimist.com

Scott Erickson, artist, author and performance speaker, visited campus and spoke at Chapel during the Black History Month speaker series last week. His presentation was entitled, “Say Yes: A Liturgy...
View on Facebook
· Share

Share on Facebook Share on Twitter Share on Linked In Share by Email

The Optimist

1 month ago

The Optimist
Residence Life is changing its lottery system to make University Park Apartments and sophomore housing decisions more fair and accessible for students. Read more: ... See MoreSee Less

Residence Life to give students more of a say in housing decisions - Optimist

acuoptimist.com

Residence Life is changing its lottery system to make University Park Apartments and sophomore housing decisions more fair and accessible for students. The new system not only gives all students an eq...
View on Facebook
· Share

Share on Facebook Share on Twitter Share on Linked In Share by Email

Videos

Optimist Newscast Feb. 22, 2023

Our top stories this week include the passing of Dr. Bob Hunter, a new endowment ... [Read More…]

  • Optimist Newscast Feb. 8, 2023
  • Optimist Newscast Feb. 1, 2023
  • Optimist Newscast Jan. 25, 2023

Latest Photos

  • Home
  • Podcasts

© 2023 ACU Optimist · All Rights Reserved